Lentils Caught Between Indian Pulse Risks and Flat FOB Prices

Indian pulse markets are calm on the surface, but weak kharif sowing, El Niño-related monsoon risks and costly pulse imports are setting up a tighter medium‑term backdrop that indirectly supports lentils. With Canadian and Chinese FOB lentil offers flat to slightly firmer in EUR, downside appears limited while monsoon and acreage data argue for a risk premium in pulses. Pulse trade in India has been generally subdued, yet the combination of sharply lower early kharif pulse sowing, high import costs and uncertain rainfall points to constrained new‑crop availability. While the focus of current tightness is on urad, moong and pigeon peas, these conditions tend to spill over into the wider pulse complex, including lentils, via demand substitution and import competition. Weather over the coming 4–6 weeks and any policy response around buffer stocks will be decisive for price direction.

Prices

FOB lentil indications in North America and China are broadly stable, with only marginal firming in some Chinese origins:

Prices above convert recent CAD/CNY FOB indications to EUR using an approximate rate of 0.92 and show a broadly sideways pattern over July, with red lentils maintaining a premium over greens.

Supply & Demand

In India, early kharif pulse sowing is sharply behind last year, with national area down from about 273,000 ha to 155,000 ha by mid‑June. Urad plantings have collapsed from roughly 35,000 ha to just 8,000 ha, while moong area has more than halved from about 154,000 ha to 69,000 ha. These are key short‑cycle pulses for domestic consumption.

This early‑season deficit, combined with uncertainty around El Niño and below‑normal June rainfall, raises the risk that overall kharif pulse output will undershoot normal unless July–August rains and sowing accelerate significantly. India is already a major pulse importer, so any further tightness in urad and moong could trigger stronger buying interest in other pulses, including lentils, particularly in the rabi season as consumers and millers seek alternatives.

On the export side, Canadian lentil supplies remain ample but are normalising from last year’s strong harvest. Recent government projections point to a smaller seeded area for lentils in 2026/27 and lower carry‑out stocks as production declines from elevated levels. This should gradually tighten export availability and limits scope for aggressive price discounting on new‑crop positions.

Fundamentals & Import Parity

Global pulse import costs are elevated. Australian chickpeas for June–December shipments are quoted around USD 590–620/t CFR, while Myanmar urad is near USD 835–915/t for FAQ and SQ qualities. Imported pigeon peas from Mozambique and Sudan are similarly firm, trading roughly in a USD 595–825/t band depending on origin and quality. Such levels keep overall protein costs high for Indian buyers.

With domestic pulse arrivals declining and overseas supplies expensive, urad, kabuli chickpeas and selected beans are drawing support despite moderate demand. Government‑held chickpea stocks can cap runaway price spikes in chana, but they do not fully insulate the market from tightness in other pulses. For lentils, this environment supports import parity: while lentils are not the main focus of current shortages, they become relatively more attractive when competing pulses are costly.

At current FOB levels in Canada and China, EUR‑denominated lentil prices sit comfortably within the wider pulse price spectrum. As long as freight and currency remain stable, downside from here appears limited, especially if Indian kharif pulse production fails to recover and import demand shifts towards rabi pulses later in the marketing year.

Weather & El Niño Outlook

Monsoon‑season weather is the critical swing factor. Forecasts highlight a strengthening El Niño in 2026, historically associated with below‑normal Indian summer monsoon rainfall. India’s meteorological and ocean services signal that El Niño conditions are expected to dominate through the June–September monsoon window, raising the risk that rainfall remains below the long‑period average.

June rainfall has already been materially deficient, and sowing of pulses and other kharif crops is lagging last year by around 20–23%. While the monsoon has now covered most of the country, late‑July and August rains need to be strongly supportive to repair soil moisture deficits and allow a catch‑up in sowing. If that fails to materialise, India’s dependence on imports of pulses and oilseeds will likely deepen, underpinning the global pulse complex, lentils included, into early 2027.

In Canada, where roughly 90% of lentils are grown in Saskatchewan, early July moisture maps show generally adequate but variable conditions following a wetter spring in some areas. However, Statistics Canada’s June survey already confirms a near‑11% year‑on‑year decline in seeded lentil area, so even with normal yields, total production is expected to fall, tightening medium‑term balance sheets.

Trading Outlook

• Short‑term (3–4 weeks): With FOB lentil prices stable and Indian pulse trade subdued, expect a sideways to mildly firm tone in EUR terms. Weather headlines around El Niño and monsoon progression are likely to be the main volatility trigger.
• Importers (South Asia, MENA): Consider scaling into coverage on dips for Q4 2026–Q1 2027, particularly in green lentils, as Canadian area cuts and Indian pulse deficits argue for a gradual firming bias.
• Producers (Canada, China): Current prices offer limited incentive to hedge aggressively lower. Retaining some optionality on later sales appears prudent while monitoring Indian policy and monsoon outcomes.
• Industrial users & packers (EU): Use the present flat market to secure a portion of 2026/27 needs, but stagger purchases given macro and FX uncertainty. Focus on origin diversification between Canada and China to manage supply risk.

3‑Day Directional Outlook (EUR, FOB)

• Canada – red and green lentils: Stable to slightly firm; El Niño‑related pulse concerns in India limit downside.
• China – small green lentils: Slight firm tone after recent small increases; no major correction expected in the next few days.
• Overall lentil complex: Consolidation phase with a modest upward bias as markets reassess global pulse supply under El Niño risk.